SIFMA Asks DoL to Reconsider Fiduciary Definition Change

The Securities Industry and Financial Markets Association (SIFMA)
has asked the Department of Labor (DoL) to reconsider its proposed rule
that would redefine the term “fiduciary” under the Employee Retirement
Income Security Act (ERISA).

In its letter to the DoL, SIFMA noted that the proposal could
critically impact the ability of individuals to reach a successful
retirement, because financial institutions most able to deliver investment assistance will no longer be able to do so without
added cost to the plan participant or IRA account holder. If the agency
will not reconsider its proposed rule, SIFMA requested that it remove IRAs at this time to determine whether the unique costs and structure
of IRAs would support a different fiduciary standard.

SIFMA noted that the proposal comes at a time where both
the Financial Industry Regulatory Authority (FINRA) and the Securities
and Exchange Commission (SEC) are currently considering regulations
implementing a fiduciary standard for brokers and investment advisers.SIFMA
requested that the DoL work more closely with FINRA and the SEC to
ensure a coordinated rulemaking process that leads to a workable standard
across business models and products.

“In the midst of other regulatory initiatives in this
area, we ask the Department to reconsider this proposal and work with
other regulators to ensure regulatory consistency,” said Tim Ryan,
president and CEO of SIFMA, in the letter.

SIFMA contended that the DoL has not fully considered the
costs of this proposal on small plans and IRAs and the manner in which
their investment choices will be curtailed. Nor has it looked at the costs on large plans
that may be unable to engage in swaps, prime broker their assets, invest
in alternatives, obtain futures execution and otherwise have their
investment choices limited by the proposal.The disruption
to the capital markets has also not been explored: the additional costs
of principal transactions, the restriction on the use of trading
platforms and other venues which improve liquidity and market
efficiency, the artificial barriers on investments in private equity and
real estate.